[Federal Register Volume 69, Number 151 (Friday, August 6, 2004)]
[Notices]
[Pages 47900-47905]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-18038]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-428-825]


Stainless Steel Sheet and Strip in Coils From Germany; Notice of 
Preliminary Results of Antidumping Duty Administrative Review

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.
SUMMARY: In response to a request from Allegheny Ludlum, AK Steel 
Corporation, Butler Armco Independent Union, J&L Specialty Steel, Inc., 
North American Stainless, United Steelworkers of America, AFL-CIO/CLC, 
and Zanesville Armco Independent Organization (collectively, 
petitioners), and respondent, ThyssenKrupp Nirosta GmbH, ThyssenKrupp 
VDM GmbH, ThyssenKrupp Nirosta North America, Inc., and ThyssenKrupp 
VDM USA, Inc. (collectively, TKN), the Department of Commerce (the 
Department) is conducting an administrative review of the antidumping 
duty order on stainless steel sheet and strip in coils (S4) from 
Germany. The review covers one manufacturer/exporter of the subject 
merchandise to the United States during the period of review (POR) July 
1, 2002, through June 30, 2003.
    We preliminarily determine that TKN made sales at less than fair 
value during the POR. If these preliminary results are adopted in our 
final results of review, we will instruct U.S. Customs and Border 
Protection (Customs) to assess antidumping duties based on the 
difference between the United States Price (USP) and normal value (NV).
    Interested parties are invited to comment on these preliminary 
results. Parties who submit arguments in this proceeding are requested 
to submit with the arguments: (1) A statement of the issues and (2) a 
brief summary of the arguments (no longer than five pages, including 
footnotes) and (3) a table of authorities.

DATES: Effective Date: August 6, 2004.

FOR FURTHER INFORMATION CONTACT: Patricia Tran or Robert James at (202) 
482-1121 or (202) 482-0649, respectively, Antidumping and 
Countervailing Duty Enforcement Office 6, Import Administration, 
International Trade Administration, U.S. Department of Commerce, 14th 
Street and Constitution Avenue, NW., Washington, DC 20230.

SUPPLEMENTARY INFORMATION:

Background

    The Department published an antidumping duty order on S4 from 
Germany on July 27, 1999. See Notice of Amended Final Determination of 
Sales at Less than Fair Value and Antidumping Duty Order; Stainless 
Steel Sheet and Strip in Coils from Germany, 64 FR 40557 (July 27, 
1999) (Antidumping Duty Order). The Department published the Notice of 
Opportunity to Request Administrative Review of S4 from Germany for the 
period July 1, 2002, through June 30, 2003, on July 2, 2003 (67 FR 
44172).
    On July 24 and 29, 2003, respectively, TKN and petitioners 
requested an

[[Page 47901]]

administrative review of TKN's sales for the period July 1, 2002, 
through June 30, 2003. On August 22, 2003, the Department published in 
the Federal Register a notice of initiation of this antidumping duty 
administrative review. See Notice of Initiation of Antidumping and 
Countervailing Duty Administrative Reviews and Requests for Revocation 
in Part, 68 FR 50750 (August 22, 2003).
    On September 12, 2003, the Department issued an antidumping duty 
questionnaire to TKN. TKN submitted its response to section A of the 
questionnaire on October 17, 2003, and its response to sections B 
through D of the questionnaire on November 24, 2003.\1\ On March 23, 
2004, the Department issued a supplemental questionnaire for sections 
A, B, and C, to which TKN responded on April 20 and 26, 2004. On May 
05, 2004, the Department issued a supplemental questionnaire for 
section D. TKN responded to this supplemental questionnaire on May 19, 
2004. Finally, on July 23, 2004, the Department issued a third 
supplemental questionnaire, for section B, to which TKN responded on 
July 27, 2004.
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    \1\ Section A of the questionnaire requests general information 
concerning a company's corporate structure and business practices, 
the merchandise under review that it sells, and the manner in which 
it sells that merchandise in all of its markets. Section B requests 
a complete listing of all home market sales, or, if the home market 
is not viable, of sales in the most appropriate third-country market 
(this section is not applicable to respondents in non-market economy 
cases). Section C requests a complete listing of U.S. sales. Section 
D requests information on the cost of production of the foreign like 
product and the constructed value of the merchandise under review. 
Section E requests information on further manufacturing.
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    Because it was not practicable to complete this review within the 
normal time frame, on March 10, 2004, we published in the Federal 
Register our notice of the extension of time limits for this review. 
See Stainless Steel Sheet and Strips in Coils from Germany; Antidumping 
Duty Administrative Review; Extension of Time Limit for Preliminary 
Results, 69 FR 11386 (March 10, 2004). This extension established the 
deadline for these preliminary results as July 30, 2004.

Scope of the Review

    The products covered by this order are certain stainless steel 
sheet and strip in coils. Stainless steel is an alloy steel containing, 
by weight, 1.2 percent or less of carbon and 10.5 percent or more of 
chromium, with or without other elements. The subject sheet and strip 
is a flat-rolled product in coils that is greater than 9.5 mm in width 
and less than 4.75 mm in thickness, and that is annealed or otherwise 
heat treated and pickled or otherwise descaled. The subject sheet and 
strip may also be further processed (e.g., cold-rolled, polished, 
aluminized, coated, etc.) provided that it maintains the specific 
dimensions of sheet and strip following such processing. The 
merchandise subject to this order is currently classifiable in the 
Harmonized Tariff Schedule of the United States (HTS) at subheadings: 
7219.13.0031, 7219.13.0051, 7219.13.0071, 7219.1300.81,\2\ 
7219.14.0030, 7219.14.0065, 7219.14.0090, 7219.32.0005, 7219.32.0020, 
7219.32.0025, 7219.32.0035, 7219.32.0036, 7219.32.0038, 7219.32.0042, 
7219.32.0044, 7219.33.0005, 7219.33.0020, 7219.33.0025, 7219.33.0035, 
7219.33.0036, 7219.33.0038, 7219.33.0042, 7219.33.0044, 7219.34.0005, 
7219.34.0020, 7219.34.0025, 7219.34.0030, 7219.34.0035, 7219.35.0005, 
7219.35.0015, 7219.35.0030, 7219.35.0035, 7219.90.0010, 7219.90.0020, 
7219.90.0025, 7219.90.0060, 7219.90.0080, 7220.12.1000, 7220.12.5000, 
7220.20.1010, 7220.20.1015, 7220.20.1060, 7220.20.1080, 7220.20.6005, 
7220.20.6010, 7220.20.6015, 7220.20.6060, 7220.20.6080, 7220.20.7005, 
7220.20.7010, 7220.20.7015, 7220.20.7060, 7220.20.7080, 7220.20.8000, 
7220.20.9030, 7220.20.9060, 7220.90.0010, 7220.90.0015, 7220.90.0060, 
and 7220.90.0080. Although the HTS subheadings are provided for 
convenience and customs purposes, the Department's written description 
of the merchandise under review is dispositive.
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    \2\ Due to changes to the HTS numbers in 2001, 7219.13.0030, 
7219.13.0050, 7219.13.0070, and 7219.13.0080 are now 7219.13.0031, 
7219.13.0051, 7219.13.0071, and 7219.13.0081, respectively.
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    Excluded from the review of this order are the following: (1) Sheet 
and strip that is not annealed or otherwise heat treated and pickled or 
otherwise descaled, (2) sheet and strip that is cut to length, (3) 
plate (i.e., flat-rolled stainless steel products of a thickness of 
4.75 mm or more), (4) flat wire (i.e., cold-rolled sections, with a 
prepared edge, rectangular in shape, of a width of not more than 9.5 
mm), and (5) razor blade steel. Razor blade steel is a flat-rolled 
product of stainless steel, not further worked than cold-rolled (cold-
reduced), in coils, of a width of not more than 23 mm and a thickness 
of 0.266 mm or less, containing, by weight, 12.5 to 14.5 percent 
chromium, and certified at the time of entry to be used in the 
manufacture of razor blades. See chapter 72 of the HTS, ``Additional 
U.S. Note'' 1(d).
    Flapper valve steel is also excluded from the scope of the order. 
This product is defined as stainless steel strip in coils containing, 
by weight, between 0.37 and 0.43 percent carbon, between 1.15 and 1.35 
percent molybdenum, and between 0.20 and 0.80 percent manganese. This 
steel also contains, by weight, phosphorus of 0.025 percent or less, 
silicon of between 0.20 and 0.50 percent, and sulfur of 0.020 percent 
or less. The product is manufactured by means of vacuum arc remelting, 
with inclusion controls for sulphide of no more than 0.04 percent and 
for oxide of no more than 0.05 percent. Flapper valve steel has a 
tensile strength of between 210 and 300 ksi, yield strength of between 
170 and 270 ksi, plus or minus 8 ksi, and a hardness (Hv) of between 
460 and 590. Flapper valve steel is most commonly used to produce 
specialty flapper valves in compressors.
    Also excluded is a product referred to as suspension foil, a 
specialty steel product used in the manufacture of suspension 
assemblies for computer disk drives. Suspension foil is described as 
302/304 grade or 202 grade stainless steel of a thickness between 14 
and 127 microns, with a thickness tolerance of plus-or-minus 2.01 
microns, and surface glossiness of 200 to 700 percent Gs. Suspension 
foil must be supplied in coil widths of not more than 407 mm, and with 
a mass of 225 kg or less. Roll marks may only be visible on one side, 
with no scratches of measurable depth. The material must exhibit 
residual stresses of 2 mm maximum deflection, and flatness of 1.6 mm 
over 685 mm length.
    Certain stainless steel foil for automotive catalytic converters is 
also excluded from the scope of this order. This stainless steel strip 
in coils is a specialty foil with a thickness of between 20 and 110 
microns used to produce a metallic substrate with a honeycomb structure 
for use in automotive catalytic converters. The steel contains, by 
weight, carbon of no more than 0.030 percent, silicon of no more than 
1.0 percent, manganese of no more than 1.0 percent, chromium of between 
19 and 22 percent, aluminum of no less than 5.0 percent, phosphorus of 
no more than 0.045 percent, sulfur of no more than 0.03 percent, 
lanthanum of less than 0.002 or greater than 0.05 percent, and total 
rare earth elements of more than 0.06 percent, with the balance iron.
    Permanent magnet iron-chromium-cobalt alloy stainless strip is also

[[Page 47902]]

excluded from the scope of this order. This ductile stainless steel 
strip contains, by weight, 26 to 30 percent chromium, and 7 to 10 
percent cobalt, with the remainder of iron, in widths 228.6 mm or less, 
and a thickness between 0.127 and 1.270 mm. It exhibits magnetic 
remanence between 9,000 and 12,000 gauss, and a coercivity of between 
50 and 300 oersteds. This product is most commonly used in electronic 
sensors and is currently available under proprietary trade names such 
as ``Arnokrome III.''\3\
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    \3\ ``Arnokrome III'' is a trademark of the Arnold Engineering 
Company.
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    Certain electrical resistance alloy steel is also excluded from the 
scope of this order. This product is defined as a non-magnetic 
stainless steel manufactured to American Society of Testing and 
Materials (ASTM) specification B344 and containing, by weight, 36 
percent nickel, 18 percent chromium, and 46 percent iron, and is most 
notable for its resistance to high temperature corrosion. It has a 
melting point of 1390 degrees Celsius and displays a creep rupture 
limit of 4 kilograms per square millimeter at 1000 degrees Celsius. 
This steel is most commonly used in the production of heating ribbons 
for circuit breakers and industrial furnaces, and in rheostats for 
railway locomotives. The product is currently available under 
proprietary trade names such as ``Gilphy 36.''\4\
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    \4\ ``Gilphy 36'' is a trademark of Imphy, S.A.
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    Certain martensitic precipitation-hardenable stainless steel is 
also excluded from the scope of this order. This high-strength, ductile 
stainless steel product is designated under the Unified Numbering 
System (UNS) as S45500-grade steel, and contains, by weight, 11 to 13 
percent chromium, and 7 to 10 percent nickel. Carbon, manganese, 
silicon and molybdenum each comprise, by weight, 0.05 percent or less, 
with phosphorus and sulfur each comprising, by weight, 0.03 percent or 
less. This steel has copper, niobium, and titanium added to achieve 
aging, and will exhibit yield strengths as high as 1700 Mpa and 
ultimate tensile strengths as high as 1750 Mpa after aging, with 
elongation percentages of 3 percent or less in 50 mm. It is generally 
provided in thicknesses between 0.635 and 0.787 mm, and in widths of 
25.4 mm. This product is most commonly used in the manufacture of 
television tubes and is currently available under proprietary trade 
names such as ``Durphynox 17.''\5\
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    \5\ ``Durphynox 17'' is a trademark of Imphy, S.A.
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    Finally, three specialty stainless steels typically used in certain 
industrial blades and surgical and medical instruments are also 
excluded from the scope of this order. These include stainless steel 
strip in coils used in the production of textile cutting tools (e.g., 
carpet knives).\6\ This steel is similar to AISI grade 420 but 
containing, by weight, 0.5 to 0.7 percent of molybdenum. The steel also 
contains, by weight, carbon of between 1.0 and 1.1 percent, sulfur of 
0.020 percent or less, and includes between 0.20 and 0.30 percent 
copper and between 0.20 and 0.50 percent cobalt. This steel is sold 
under proprietary names such as ``GIN4 Mo.'' The second excluded 
stainless steel strip in coils is similar to AISI 420-J2 and contains, 
by weight, carbon of between 0.62 and 0.70 percent, silicon of between 
0.20 and 0.50 percent, manganese of between 0.45 and 0.80 percent, 
phosphorus of no more than 0.025 percent and sulfur of no more than 
0.020 percent. This steel has a carbide density on average of 100 
carbide particles per 100 square microns. An example of this product is 
``GIN5'' steel. The third specialty steel has a chemical composition 
similar to AISI 420 F, with carbon of between 0.37 and 0.43 percent, 
molybdenum of between 1.15 and 1.35 percent, but lower manganese of 
between 0.20 and 0.80 percent, phosphorus of no more than 0.025 
percent, silicon of between 0.20 and 0.50 percent, and sulfur of no 
more than 0.020 percent. This product is supplied with a hardness of 
more than Hv 500 guaranteed after customer processing, and is supplied 
as, for example, ``GIN6.''\7\
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    \6\ This list of uses is illustrative and provided for 
descriptive purposes only.
    \7\ ``GIN4 Mo,'' ``GIN5'' and ``GIN6'' are the proprietary 
grades of Hitachi Metals America, Ltd.
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Duty Absorption

    On September 22, 2003, petitioners requested that the Department 
determine whether antidumping duties had been absorbed during the POR 
by the respondent. Section 751(a)(4) of the Tariff Act provides for the 
Department, if requested, to determine, during an administrative review 
initiated two or four years after the publication of the order, whether 
antidumping duties have been absorbed by a foreign producer or 
exporter, if the subject merchandise is sold in the United States 
through an affiliated importer. Because TKN sold subject merchandise to 
unaffiliated customers in the United States through an importer that is 
affiliated (i.e., TKNNA, TKSSNA, and TKVDM USA), and because this 
review was initiated four years after the publication of the order, we 
will make a duty absorption determination in this segment of the 
proceeding within the meaning of section 751(a)(4) of the Tariff Act.
    In its July 12, 2004, supplemental questionnaire, the Department 
requested evidence from the respondent to demonstrate that unaffiliated 
U.S. purchasers will pay any antidumping duties ultimately assessed on 
entries during this POR. On July 14, 2004, TKN stated it ``does not 
believe that there is any basis for concluding that {respondents{time}  
absorbed antidumping duties in this review or will do so after they are 
assessed as a result of this review.'' In determining whether 
antidumping duties have been absorbed by the respondent during the POR, 
we presume that the duties will be absorbed for those sales that have 
been made at less than normal value (NV). This presumption can be 
rebutted with evidence (e.g., an agreement between the affiliated 
importer and unaffiliated purchaser) that the unaffiliated purchaser 
will pay the full duty ultimately assessed on the subject merchandise. 
Despite TKN's claim, it provided no evidence on the record showing that 
unaffiliated purchasers will pay the full duty ultimately assessed on 
the subject merchandise. Therefore, we preliminarily find that 
antidumping duties have been absorbed by TKN on all U.S. sales made 
through its affiliated importers.

Verification

    As provided in section 782(i) of the Tariff Act, the Department 
conducted a home market sales verification at TKN's headquarters in 
Krefeld, Germany and at its affiliate, Nirosta Service Center (NSC), in 
Wilnsdorf-Anzhausen, Germany. We used standard verification procedures, 
including on-site inspection of the facility, examination of relevant 
records, and selection of original documents containing relevant 
information. The sales verification report will be released after the 
preliminary results.

Fair Value Comparisons

    To determine whether sales of S4 in the United States were made at 
less than fair value, we compared USP to NV, as described in the 
``Constructed Export Price'' and ``Normal Value'' sections of this 
notice. In accordance with section 777A(d)(2) of the Tariff Act, we 
calculated monthly weighted-average NVs and compared these to 
individual U.S. transactions.

Constructed Export Price (CEP)

    We calculated CEP in accordance with subsection 772(b) of the 
Tariff Act, because sales to the first unaffiliated

[[Page 47903]]

purchaser took place after importation into the United States. We based 
CEP on the packed, delivered, duty paid or delivered prices to 
unaffiliated purchasers in the United States. We made adjustments for 
price or billing errors, where applicable. We also made deductions for 
movement expenses in accordance with section 772(c)(2)(A) of the Tariff 
Act; these included, where appropriate, foreign inland freight, marine 
insurance, U.S. customs duties, U.S. inland freight, foreign brokerage 
and handling, international freight, foreign inland freight, insurance, 
and U.S. warehousing expenses. In accordance with section 772(d)(1) of 
the Tariff Act, we deducted those selling expenses associated with 
economic activities occurring in the United States, including direct 
selling expenses (credit costs, warranty expenses, commissions and 
other direct selling expenses), inventory carrying costs, and other 
indirect selling expenses. We offset credit expenses by the amount of 
interest revenue on sales. For CEP sales, we also made an adjustment 
for profit in accordance with section 772(d)(3) of the Tariff Act.
    For those sales in which material was sent to an unaffiliated U.S. 
processor to be further processed, we made an adjustment based on the 
transaction-specific further-processing amounts reported by TKN.

Home Market

    In order to determine whether there was a sufficient volume of 
sales in the home market to serve as a viable basis for calculating NV 
(i.e., the aggregate volume of home market sales of the foreign like 
product was equal to or greater than five percent of the aggregate 
volume of U.S. sales), we compared the respondent's volume of home 
market sales of the foreign like product to the volume of U.S. sales of 
the subject merchandise, in accordance with section 773(a)(1) of the 
Tariff Act. As TKN's aggregate volume of home market sales of the 
foreign like product was greater than five percent of its aggregate 
volume of U.S. sales of the subject merchandise, we determined the home 
market was viable. Therefore, we have based NV on home market sales in 
the usual commercial quantities and in the ordinary course of trade.
    Sales to affiliated customers in the home market not made at arm's-
length prices (if any) were excluded from our analysis because we 
considered them to be outside the ordinary course of trade. If sales 
were not made at arm's-length, then the Department used the sale from 
the affiliated party to the first unaffiliated party. See 19 CFR 
351.102. To test whether these sales to affiliates were made at arm's 
length prices, we compared, on a model-specific basis, the starting 
prices of sales to affiliated and unaffiliated customers net of all 
movement charges, direct selling expenses, and packing. Where, for the 
tested models of subject merchandise, prices to the affiliated party 
were between 98 and 102 percent of the price of identical or comparable 
merchandise to the unaffiliated parties, we determined that sales made 
to the affiliated party were at arm's length. See 19 CFR 351.403(c). In 
instances where no price ratio could be calculated for an affiliated 
customer because identical merchandise was not sold to unaffiliated 
customers, we were unable to determine whether these sales were made at 
arm's length prices and, therefore, excluded them from our analysis. 
See Final Determination of Sales at Less Than Fair Value: Certain Cold-
Rolled Carbon Steel Flat Products from Argentina, 58 FR 37062, 37077 
(July 9, 1993) and Notice of Preliminary Determination of Sales at Less 
Than Fair Value and Postponement of Final Determination; Emulsion 
Styrene-Butadiene Rubber from Brazil, 63 FR 59509, 59512 (November 4, 
1998). Where the exclusion of such sales eliminated all sales of the 
most appropriate comparison product, we made a comparison to the next 
most similar model.

Cost of Production (COP) Analysis

    The Department disregarded certain sales made by TKN in the 
preceding administrative review because these sales were below cost. 
See Stainless Steel Sheet and Strip in Coils from Germany: Notice of 
Final Results of Antidumping Duty Administrative Review, 69 FR 6262, 
(February 10, 2004); see also Stainless Steel Sheet and Strip in Coils 
from Germany; Notice of Preliminary Results of Antidumping Duty 
Administrative Review, 68 FR 47039, 47041--42 (August 7, 2003). Thus, 
in accordance with section 773(b)(2)(A)(ii) of the Tariff Act, there 
are reasonable grounds to believe or suspect that sales of S4 in the 
home market were made at prices below their COP in the current review 
period. Accordingly, pursuant to section 773(b) of the Tariff Act, we 
initiated a cost investigation to determine whether sales made during 
the POR were at prices below their respective COP.
    In accordance with section 773(b)(3) of the Tariff Act, we 
calculated COP based on the sum of the cost of materials and 
fabrication for the foreign like product, plus an amount for general 
and administrative expenses (G&A), interest expenses, and home market 
packing costs. We relied on the COP data submitted by TKN, except for 
the two changes noted below.
    In accordance with section 773(f)(2) of the Tariff Act, where TKN's 
reported transfer prices for purchases of nickel from an affiliated 
party were not at arm's length, we increased these prices to reflect 
the prevailing market prices. See TKN's Preliminary Results Analysis 
Memorandum, July 29, 2004. For both TKN and VDM, we revised the 
interest expense ratio by recalculating the short-term interest income 
offset and including the net miscellaneous financial expense. See id.
    In accordance with section 773(b)(1) of the Tariff Act, in 
determining whether to disregard home market sales made at prices below 
COP, we examined whether such sales were made within an extended period 
of time in substantial quantities, and whether such sales were made at 
prices which would permit recovery of all costs within a reasonable 
period of time.
    Pursuant to section 773(b)(2)(C) of the Tariff Act, where less than 
20 percent of TKN's sales of a given model were at prices less than 
COP, we did not disregard any below-cost sales of that model because 
these below-cost sales were not made in substantial quantities. Where 
20 percent or more of TKN's home market sales of a given model were at 
prices less than the COP, we disregarded the below-cost sales because 
such sales were made: (1) In substantial quantities within the POR 
(i.e., within an extended period of time) in accordance with section 
773(b)(2)(B) of the Tariff Act, and (2) at prices which would not 
permit recovery of all costs within a reasonable period of time, in 
accordance with section 773(b)(2)(D) of the Tariff Act (i.e., the sales 
were made at prices below the weighted-average per-unit COP for the 
POR). We used the remaining sales as the basis for determining NV, if 
such sales existed, in accordance with section 773(b)(1) of the Tariff 
Act. We did not make use of constructed value, as all U.S. sales were 
matched to home market sales.

Normal Value

    We calculated NV based on prices to unaffiliated customers or 
prices to affiliated customers that we determined to be at arm's 
length. We made adjustments for interest revenue, discounts, and 
rebates where appropriate. We made deductions, where appropriate, for 
foreign inland freight, handling, and warehousing, pursuant to section 
773(a)(6)(B) of the Tariff Act. In addition, when comparing sales of 
similar merchandise, we made

[[Page 47904]]

adjustments for differences in cost attributable to differences in 
physical characteristics of the merchandise pursuant to section 
773(a)(6)(C)(ii) of the Tariff Act and 19 CFR 351.411. We also made 
adjustments for differences in circumstances of sale (COS) in 
accordance with section 773(a)(6)(C)(iii) of the Tariff Act and 19 CFR 
351.410. We made COS adjustments for imputed credit expenses and 
warranty expenses. We also made an adjustment, where appropriate, for 
the CEP offset in accordance with section 773(a)(7)(B) of the Tariff 
Act. See ``Level of Trade and CEP Offset'' section below. Finally, we 
deducted home market packing costs and added U.S. packing costs in 
accordance with sections 773(a)(6)(A) and (B) of the Tariff Act.

Level of Trade and CEP Offset

    In accordance with section 773(a)(1)(B)(i) of the Tariff Act, to 
the extent practicable, we determine NV based on sales in the 
comparison market at the same level of trade (LOT) as the CEP 
transaction. The NV LOT is that of the starting price sales in the 
comparison market or, when NV is based on CV, that of the sales from 
which we derive selling, general and administrative (SG&A) expenses and 
profit. For CEP, it is the level of the constructed sale from the 
exporter to the importer. Moreover, for CEP sales, we consider only the 
selling activities reflected in the price after the deduction of 
expenses and profit, pursuant to section 772(d) of the Tariff Act. See 
Micron Technology, Inc. v. United States, 243 F.3d 1301, 1314-1315 
(Fed. Cir. 2001).
    To determine whether NV sales are at a different LOT than CEP 
sales, we examine stages in the marketing process and selling functions 
along the chain of distribution between the producer and the 
unaffiliated customer. If the comparison market sales are at a 
different LOT, and the difference affects price comparability, as 
manifested in a pattern of consistent price differences between the 
sales on which NV is based and comparison market sales at the LOT of 
the export transaction, we make a LOT adjustment under section 
773(a)(7)(A) of the Tariff Act. Finally, for CEP sales, if the NV level 
is more remote from the factory than the CEP level and there is no 
basis for determining whether the differences in the levels between NV 
and CEP affect price comparability, we adjust NV under section 
773(a)(7)(B) of the Tariff Act (the CEP offset provision). See e.g., 
Certain Carbon Steel Plate from South Africa, Final Determination of 
Sales at Less Than Fair Value, 62 FR 61731, 61733 (November 19, 1997).
    In implementing these principles in this review, we asked TKN to 
identify the specific differences and similarities in selling functions 
and support services between all phases of marketing in the home market 
and the United States. TKN identified four channels of distribution in 
the home market: (1) Mill direct sales, (2) mill inventory sales, (3) 
service center inventory sales, and (4) service center processed sales. 
For all channels, TKN performs similar selling functions such as 
negotiating prices with customers, setting similar credit terms, 
arranging freight to the customer, and conducting market research and 
sales calls. The remaining selling activities did not differ 
significantly by channel of distribution. Because channels of 
distribution do not qualify as separate levels of trade when the 
selling functions performed for each customer class or channel are 
sufficiently similar, we determined that one level of trade exists for 
TKN's home market sales.
    For the U.S. market, TKN reported three channels of distribution: 
(1) Back-to-back CEP sales made through ThyssenKrupp Nirosta North 
America, Inc. (TKNNA) or ThyssenKrupp Specialty Steels NA, Inc. 
(TKSSNA); (2) consignment CEP sales made through TKNNA or TKSSNA; and 
(3) inventory sales from TKNNA and TKSSNA. All U.S. sales were CEP 
transactions and TKN performed the same selling functions in each 
instance. Therefore, the U.S. market has one LOT.
    When we compared CEP sales (after deductions made pursuant to 
section 772(d) of the Tariff Act) to home market sales, we determined 
that for CEP sales TKN performed fewer customer sales contacts, 
technical services, delivery services, and warranty services. In 
addition, the differences in selling functions performed for home 
market and CEP transactions indicate that home market sales involved a 
more advanced stage of distribution than CEP sales. In the home market, 
TKN provides marketing further down the chain of distribution by 
providing certain downstream selling functions that are normally 
performed by the affiliated resellers in the U.S. market (e.g., 
technical advice, credit and collection, etc.).
    Based on our analysis, we determined that CEP and the starting 
price of home market sales represent different stages in the marketing 
process, and are thus at different LOTs. Therefore, when we compared 
CEP sales to HM sales, we examined whether a LOT adjustment may be 
appropriate. In this case TKN sold at one LOT in the home market; 
therefore, there is no basis upon which to determine whether there is a 
pattern of consistent price differences between levels of trade. 
Further, we do not have the information which would allow us to examine 
pricing patterns of TKN's sales of other similar products, and there is 
no other record evidence upon which such an analysis could be based.
    Because the data available do not provide an appropriate basis for 
making a LOT adjustment, but the LOT in Germany for TKN is at a more 
advanced stage than the LOT of the CEP sales, a CEP offset is 
appropriate in accordance with section 773(a)(7)(B) of the Tariff Act, 
as claimed by TKN. Where there were commissions in the U.S. market but 
not the home market, we calculated the CEP offset as the lesser of 
either the U.S. commissions plus the U.S. indirect selling expenses or 
the home market indirect selling expenses. Where there were commissions 
in both the U.S. and home markets, we calculated the CEP offset as the 
lesser of either the home market indirect selling expenses or the U.S. 
indirect selling expense plus the difference between the U.S. and home 
market commissions. Where there were commissions in the home market but 
not the U.S. market, we calculated the CEP offset as the less of either 
the U.S. indirect selling expenses or the amount that the home market 
selling expenses exceed the home market commissions. We performed these 
calculations in accordance with 772(d)(1)(D) of the Tariff Act. We 
applied the CEP offset to NV, whether based on home market prices or 
CV.

Preliminary Results of Review

    As a result of our review, we preliminarily determine the following 
weighted-average dumping margin exists for the period July 1, 2002, 
through June 30, 2003:

------------------------------------------------------------------------
                                                               Weighted
                                                                average
                    Manufacturer/exporter                       margin
                                                               (percent)
------------------------------------------------------------------------
TKN.........................................................        9.95
------------------------------------------------------------------------

    The Department will disclose calculations performed within five 
days of the date of publication of this notice in accordance with 19 
CFR 351.224(b). An interested party may request a hearing within thirty 
days of publication. See CFR 351.310(c). Any hearing, if requested, 
will be held 37 days after the date of publication, or the first 
business day thereafter, unless the Department alters the date pursuant 
to 19 CFR 351.310(d). Interested parties may submit case briefs no 
later than 30

[[Page 47905]]

days after the date of publication of these preliminary results of 
review. Rebuttal briefs, limited to issues raised in the case briefs, 
may be filed no later than 35 days after the date of publication of 
this notice. Parties who submit an argument in these proceedings are 
requested to submit with the argument (1) a statement of the issue, (2) 
a brief summary of the argument and (3) a table of authorities. 
Further, we would appreciate it if parties submitting written comments 
would provide the Department with an additional copy of the public 
version of any such comments on diskette. The Department will issue 
final results of this administrative review, including the results of 
our analysis of the issues in any such written comments or at a 
hearing, within 120 days of publication of these preliminary results.
    The Department shall determine, and Customs shall assess, 
antidumping duties on all appropriate entries. In accordance with 19 
CFR 351.212(b)(1), we will calculate importer-specific ad valorem 
assessment rates for the merchandise based on the ratio of the total 
amount of antidumping duties calculated for the examined sales made 
during the POR to the total customs value of the sales used to 
calculate those duties for each importer. These rates will be assessed 
uniformly on all entries the respective importers made during the POR 
if these preliminary results are adopted in the final results of 
review. The Department will issue appropriate appraisement instructions 
directly to Customs within fifteen days of publication of the final 
results of review.
    Furthermore, the following deposit requirements will be effective 
upon completion of the final results of this administrative review for 
all shipments of S4 in coils from Germany entered, or withdrawn from 
warehouse, for consumption on or after the publication date of the 
final results of this administrative review, as provided by section 
751(a)(1) of the Tariff Act:
    (1) The cash deposit rates for TKN will be the rates established in 
the final results of review;
    (2) If the exporter is not a firm covered in this review or the 
less-than-fair-value (LTFV) investigation, but the manufacturer is, the 
cash deposit rate will be the rate established for the most recent 
period for the manufacturer of the merchandise; and
    (3) If neither the exporter nor the manufacturer is a firm covered 
in this or any previous review conducted by the Department, the cash 
deposit rate will be the ``all others'' rate of 13.48 percent from the 
LTFV investigation (see Notice of Amended Final Determination of 
Antidumping Duty Investigation: Stainless Steel Sheet and Strip in 
Coils from Germany, 67 FR 15178 (March 29, 2002)).
    This notice also serves as a preliminary reminder to importers of 
their responsibility under 19 CFR 351.402(f) to file a certificate 
regarding the reimbursement of antidumping duties prior to liquidation 
of the relevant entries during this review period. Failure to comply 
with this requirement could result in the Secretary's presumption that 
reimbursement of antidumping duties occurred and the subsequent 
assessment of double antidumping duties.
    We are issuing and publishing this notice in accordance with 
sections 751(a)(1) and 777(i)(1) of the Tariff Act.

    Dated: July 29, 2004.
Jeffrey A. May,
Acting Assistant Secretary for Import Administration.
[FR Doc. 04-18038 Filed 8-5-04; 8:45 am]
BILLING CODE 3510-DS-P